[Federal Register Volume 71, Number 86 (Thursday, May 4, 2006)]
[Notices]
[Pages 26322-26329]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-6757]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-831]


Fresh Garlic from the People's Republic of China: Preliminary 
Results of 2004-2005 Semi-Annual New Shipper Reviews

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from Shandong Chengshun Farm Produce 
Trading Company, Ltd. (``Chengshun''), Shenzhen Fanhui Import and 
Export Co., Ltd. (``Fanhui''), Qufu Dongbao Import and Export Trade 
Co., Ltd. (``Dongbao''), and Anqiu Friend Food Co., Ltd. (``Anqiu 
Friend''), the U.S. Department of Commerce (``the Department'') is 
conducting new shipper reviews of the antidumping duty order on fresh 
garlic from the People's Republic of China (``PRC''). The period of 
review (``POR'') is November 1, 2004, through April 30, 2005.
    We preliminarily determine that none of these companies have made 
sales in the United States at prices below normal value. If these 
preliminary results are adopted in our final results of this review, we 
will instruct U.S. Customs and Border Protection (``CBP'') to assess 
antidumping duties on entries of subject merchandise during the POR for 
which the importer-specific assessment rates are above de minimis.
    We invite interested parties to comment on these preliminary 
results. Parties who submit comments are requested to submit with each 
argument a statement of the issue and a brief summary of the argument. 
We will issue the final results no later than 90 days from the date of 
publication of this notice.

EFFECTIVE DATE: May 4, 2006.

FOR FURTHER INFORMATION CONTACT: Jim Nunno or Ryan Douglas, AD/CVD 
Operations, Office 8, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0783 and (202) 482-1277, respectively.

SUPPLEMENTARY INFORMATION:

[[Page 26323]]

Background

    The Department published an antidumping duty order on fresh garlic 
from the PRC on November 16, 1994. See Antidumping Duty Order: Fresh 
Garlic from the People's Republic of China, 59 FR 28462. On May 17, 
2005, we received timely requests for new shipper reviews from 
Chengshun) and Anqiu Friend. On May 26, 2005, we received a timely 
request for new shipper review from Xi'an XiongLi Foodstuff Co., Ltd. 
(``XiongLi''). On May 31, 2005, we received timely requests for new 
shipper reviews from Fanhui and Dongbao. Pursuant to section 
751(a)(2)(B) of the Tariff Act of 1930, as amended (``the Act''), and 
19 CFR 351.214(d)(1), we initiated the following three new shipper 
reviews for shipments of fresh garlic from the PRC:
1) grown by Jinxiang Chengsen Agricultural Trade Company, Ltd. 
(``CATC'') and exported by Chengshun,
2) grown by Jinxiang Tianshan Foodstuff Co., Ltd. (``JTFC'') and 
exported by XiongLi, and
3) grown and exported by Fanhui.
    On July 11, 2005, the Department published a notice of the 
initiation of the new shipper reviews of Chengshun, Fanhui, and 
XiongLi. See Fresh Garlic From the People's Republic of China; 
Initiation of New Shipper Reviews, 70 FR 39733 (July 11, 2005).
    In July 2005 we issued antidumping duty questionnaires to 
Chengshun, Fanhui, and XiongLi. Also in July 2005, we issued 
questionnaires to the importers of merchandise exported by Chengshun, 
Fanhui, and XiongLi. In August 2005, we received questionnaire 
responses from Chengshun, Fanhui, and XiongLi and from the importers of 
merchandise exported by Chengshun and Fanhui.
    On August 9, 2005, the Department received a timely request from 
XiongLi to withdraw its request for this review. On September 7, 2005, 
the Department rescinded the new shipper review with respect to 
XiongLi. See Fresh Garlic From the People's Republic of China: 
Rescission of Antidumping Duty New Shipper Review, 70 FR 54358 
(September 14, 2005). We also initiated two additional new shipper 
reviews for merchandise grown and exported by Dongbao and Anqiu Friend.
    On October 3, 2005, the Department published a notice of the 
initiation of the new shipper review of Dongbao. See Fresh Garlic From 
the People's Republic of China: Initiation of Antidumping Duty New 
Shipper Review, 70 FR 57561 (October 3, 2005). On October 26, 2005, the 
Department published a notice of the initiation of the new shipper 
review of Anqiu Friend. See Fresh Garlic From the People's Republic of 
China: Initiation of Antidumping Duty New Shipper Review, 70 FR 61787 
(October 26, 2005).
    In October and November 2005, we issued antidumping duty 
questionnaires to Dongbao and Anqiu Friend, which included 
questionnaires to the importers of merchandise exported by Dongbao and 
Anqiu Friend. We received questionnaire responses from Dongbao in 
November 2005 and from Anqiu Friend in December 2005. The Department 
issued supplemental questionnaires to and received responses from all 
four respondents from November 2005 through March 2006.
    On November 30, 2005, we extended the deadline for the issuance of 
the preliminary results of these new shipper reviews until April 26, 
2006. See Fresh Garlic From the People's Republic of China: Extension 
of Time Limit for the Preliminary Results of New Shipper Reviews, 70 FR 
72608 (December 6, 2005).
    In March 2006, the Department conducted verifications of all four 
respondents. Also in March 2006, the Department amended the 
administrative protective orders in these new shipper reviews to allow 
parties to use business proprietary information in the record of the 
Chengshun and Fanhui new shipper reviews in making comments in either 
of the other two new shipper reviews (i.e., of Dongbao or Anqiu), and 
vice-versa.\1\
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    \1\ See Memorandum to the File titled, ``2004-2005 Semi-Annual 
New Shipper Reviews of Fresh Garlic from the People's Republic of 
China: Use of Business Proprietary Information in Parallel 
Segments,'' dated March 21, 2006.
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Period of Review

    The POR is November 1, 2004, through April 30, 2005.

Scope of the Order

    The products subject to the antidumping duty order are all grades 
of garlic, whole or separated into constituent cloves, whether or not 
peeled, fresh, chilled, frozen, provisionally preserved, or packed in 
water or other neutral substance, but not prepared or preserved by the 
addition of other ingredients or heat processing. The differences 
between grades are based on color, size, sheathing, and level of decay.
    The scope of this order does not include the following: (a) garlic 
that has been mechanically harvested and that is primarily, but not 
exclusively, destined for non-fresh use; or (b) garlic that has been 
specially prepared and cultivated prior to planting and then harvested 
and otherwise prepared for use as seed.
    The subject merchandise is used principally as a food product and 
for seasoning. The subject garlic is currently classifiable under 
subheadings 0703.20.0010, 0703.20.0020, 0703.20.0090, 0710.80.7060, 
0710.80.9750, 0711.90.6000, and 2005.90.9700 of the Harmonized Tariff 
Schedule of the United States (HTSUS). Although the HTSUS subheadings 
are provided for convenience and customs purposes, the written 
description of the scope of this order is dispositive. In order to be 
excluded from the antidumping duty order, garlic entered under the 
HTSUS subheadings listed above that is (1) mechanically harvested and 
primarily, but not exclusively, destined for non-fresh use or (2) 
specially prepared and cultivated prior to planting and then harvested 
and otherwise prepared for use as seed must be accompanied by 
declarations to CBP to that effect.

Non-market Economy Country Status

    In every case conducted by the Department involving the PRC, the 
PRC has been treated as a non-market economy (``NME'') country. In 
accordance with section 771(18)(C)(i) of the Act, any determination 
that a foreign country is an NME country shall remain in effect until 
revoked by the administering authority. See Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, From the People's Republic of 
China: Preliminary Results 2001-2002 Administrative Review and Partial 
Rescission of Review, 68 FR 7500 (February 14, 2003). None of the 
parties to this proceeding has contested such treatment. Accordingly, 
we calculated normal value (``NV'') in accordance with section 773(c) 
of the Act, which applies to NME countries.

Surrogate Country

    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs it to base NV, in most 
circumstances, on the NME producer's FOPs, valued in a surrogate market 
economy country or countries considered to be appropriate by the 
Department. In accordance with section 773(c)(4) of the Act, in valuing 
the factors of production, the Department shall utilize, to the extent 
possible, the prices or costs of FOPs in one or more market economy 
countries that are: (1) at a level of economic development comparable 
to that of the NME country; and (2) significant producers of comparable 
merchandise. The sources

[[Page 26324]]

of the surrogate factor values are discussed under the ``Normal Value'' 
section below and in the Memorandum to the File titled, ``Factors 
Valuations for the Preliminary Results of the New Shipper Reviews,'' 
dated April 26, 2006 (``Factor Valuation Memorandum''), which is on 
file in the Central Records Unit (``CRU''), Room B-099 of the main 
Department building.
    The Department has determined that India, Indonesia, Sri Lanka, the 
Philippines, and Egypt are countries comparable to the PRC in terms of 
economic development. See Memorandum to the File titled ``New Shipper 
Reviews of Fresh Garlic from the People's Republic of China (PRC): 
Request for a List of Surrogate Countries,'' dated January 9, 2006, 
which is on file in the CRU.
    In addition to being among the countries comparable to the PRC in 
terms of economic development, India is a significant producer of the 
subject merchandise. Therefore, we have used India as the surrogate 
country and, accordingly, have calculated NV using Indian prices to 
value the PRC producers' FOPs, when available and appropriate. See 
Memorandum to the File titled, ``Semi-Annual New Shipper Reviews of the 
Antidumping Duty Order of Fresh Garlic from the People's Republic of 
China: Selection of a Surrogate Country,'' dated April 26, 2006, 
(``Surrogate Country Memorandum''), which is on file in the CRU. For a 
detailed discussion of these comments, see Factor Valuation Memorandum. 
We have obtained and relied upon publicly available information 
wherever possible.
    In accordance with 19 CFR 351.301(c)(3)(ii), for the final results 
in an antidumping new shipper review, interested parties may submit 
publicly available information to value FOPs within 20 days after the 
date of publication of these preliminary results.

Separate Rates

    The Department has treated the PRC as an NME country in all past 
antidumping investigations. See, e.g., Notice of Final Determination of 
Sales at Less Than Fair Value: Bulk Aspirin From the People's Republic 
of China, 65 FR 33805 (May 25, 2000), and Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Non-Frozen Apple Juice 
Concentrate from the People's Republic of China, 65 FR 19873 (April 13, 
2000). A designation as an NME remains in effect until it is revoked by 
the Department. See section 771(18)(C) of the Act. Accordingly, there 
is a rebuttable presumption that all companies within the PRC are 
subject to government control and, thus, should be assessed a single 
antidumping duty rate.
    It is the Department's standard policy to assign all exporters of 
the merchandise subject to review in NME countries a single rate unless 
an exporter can affirmatively demonstrate an absence of government 
control, both in law (de jure) and in fact (de facto), with respect to 
exports. To establish whether a company is sufficiently independent to 
be entitled to a separate, company-specific rate, the Department 
analyzes each exporting entity in an NME country under the test 
established in the Final Determination of Sales at Less than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991), as amplified by the Notice of Final Determination of Sales at 
Less Than Fair Value: Silicon Carbide from the People's Republic of 
China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide'').
    Chengshun, Fanhui, Dongbao and Anqiu Friend all provided the 
requested separate-rate information in their responses to our original 
and supplemental questionnaires. Accordingly, consistent with Notice of 
Final Determination of Sales at Less Than Fair Value: Bicycles From the 
People's Republic of China, 61 FR 56570 (April 30, 1996), we performed 
separate-rates analyses to determine whether each producer/exporter is 
independent from government control.

A. Absence of De Jure Control

    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) an absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; and (2) any 
legislative enactments decentralizing control of companies.
    Each respondent has placed on the record a number of documents to 
demonstrate absence of de jure control including the ``Foreign Trade 
Law of the People's Republic of China,'' the ``Company Law of the 
People's Republic of China,'' and the ``Administrative Regulations of 
the People's Republic of China Governing the Registration of Legal 
Corporations.'' The Department has analyzed such PRC laws and found 
that they establish an absence of de jure control. See, e.g., 
Preliminary Results of New Shipper Review: Certain Preserved Mushrooms 
From the People's Republic of China, 66 FR 30695 (June 7, 2001). We 
have no information in this proceeding that would cause us to 
reconsider this determination. Thus, we believe that the evidence on 
the record supports a preliminary finding of an absence of de jure 
government control based on: (1) an absence of restrictive stipulations 
associated with the exporter's business license; and (2) the legal 
authority on the record decentralizing control over the respondent.

B. Absence of De Facto Control

    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Final Determination of Sales at Less Than Fair Value: Certain Preserved 
Mushrooms from the People's Republic of China, 63 FR 72255 (December 
31, 1998). Therefore, the Department has determined that an analysis of 
de facto control is critical in determining whether respondents are, in 
fact, subject to a degree of government control which would preclude 
the Department from assigning separate rates. The Department typically 
considers four factors in evaluating whether each respondent is subject 
to de facto government control of its export functions: (1) whether the 
exporter sets its own export prices independent of the government and 
without the approval of a government authority; (2) whether the 
respondent has the authority to negotiate and sign contracts, and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of its management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses.
    Chengshun reported that it is a limited liability company. Fanhui 
reported that it is a privately owned limited liability corporation. 
Dongbao reported that it is a privately owned company. Anqiu Friend 
reported that it is an independently managed limited liability company. 
Each has asserted the following: (1) There is no government 
participation in setting export prices; (2) sales managers and 
authorized employees have the authority to bind sales contracts; (3) 
they do not have to notify any government authorities of management 
selections; (4) there are no restrictions on the use of export revenue; 
(5) each is responsible for financing its own losses. The questionnaire 
responses of Chengshun, Fanhui, Dongbao and Anqiu Friend do not suggest 
that pricing is coordinated among exporters. During our analysis of the 
information on the record, we found no information indicating the 
existence of government control. Consequently,

[[Page 26325]]

we preliminarily determine that Chengshun, Fanhui, Dongbao and Anqiu 
Friend have met the criteria for the application of a separate rate.

Export Price

    For Chengshun, Fanhui, Dongbao, and Anqiu Friend, we based the U.S. 
price on export price (``EP''), in accordance with section 772(a) of 
the Act, because the first sale to an unaffiliated purchaser was made 
prior to importation and constructed export price (``CEP'') was not 
otherwise warranted by the facts on the record. We calculated EP based 
on the packed price from the exporter to the first unaffiliated 
customer in the United States.
    For Chengshun, we deducted foreign inland freight and foreign 
brokerage and handling from the gross unit price, in accordance with 
section 772(c) of the Act because Chengshun did not incur any other 
shipping and handling expenses.
    For Fanhui, we deducted foreign inland freight and foreign 
brokerage and handling from the gross unit price, in accordance with 
section 772(c) of the Act because Fanhui reported that all shipments 
were FOB Qingdao and all other shipping and handling expenses were paid 
by the U.S. customer.
    For Dongbao, we deducted foreign inland freight and foreign 
brokerage and handling from the gross unit price, in accordance with 
section 772(c) of the Act because Dongbao reported that all shipments 
were FOB China port and all other shipping and handling expenses were 
paid by the U.S. customer.
    For Anqiu Friend, we deducted foreign inland freight and foreign 
brokerage and handling from the gross unit price, in accordance with 
section 772(c) of the Act because Anqiu Friend did not incur any other 
shipping and handling expenses.
    As all foreign inland freight and foreign brokerage and handling 
expenses (where applicable) were provided by PRC service providers or 
paid for in renminbi, we valued these services using Indian surrogate 
values (see ``Factor Valuations'' section below for further 
discussion). See Factor Valuation Memorandum. For a more detailed 
explanation of the company-specific adjustments that we made in the 
calculation of the dumping margins for these preliminary results, see 
the company-specific preliminary results analysis memoranda, dated 
April 26, 2006, on file in the CRU.\2\
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    \2\ See Memorandum to the File titled, ``Analysis for the 
Preliminary Results of the New Shipper Review of Fresh Garlic from 
the People's Republic of China: Shandong Chengshun Farm Produce 
Trading Company, Ltd.,'' dated April 26, 2006, Memorandum to the 
File titled, ``Analysis for the Preliminary Results of the New 
Shipper Review of Fresh Garlic from the People's Republic of China: 
Shenzhen Fanhui Import and Export Co., Ltd.,'' dated April 26, 2006, 
Memorandum to the File titled, ``Analysis for the Preliminary 
Results of the New Shipper Review of Fresh Garlic from the People's 
Republic of China: Qufu Dongbao Import and Export Trade Co., Ltd.,'' 
dated April 26, 2006, and Memorandum to the File titled, ``Analysis 
for the Preliminary Results of the New Shipper Review of Fresh 
Garlic from the People's Republic of China: Anqiu Friend Food Co., 
Ltd.,'' dated April 26, 2006.
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Normal Value

1. Methodology

    The Department's general policy, consistent with section 
773(c)(1)(B) of the Act, is to calculate NV using each of the FOPs that 
a respondent consumes in the production of a unit of the subject 
merchandise. There are circumstances, however, in which the Department 
will modify its standard FOP methodology, choosing to apply a surrogate 
value to an intermediate input instead of the individual FOPs used to 
produce that intermediate input. In some cases, a respondent may report 
factors used to produce an intermediate input that accounts for an 
insignificant share of total output. When the potential increase in 
accuracy to the overall calculation that results from valuing each of 
the FOPs is outweighed by the resources, time, and burden such an 
analysis would place on all parties to the proceeding, the Department 
has valued the intermediate input directly using a surrogate value. 
See, e.g., Notice of Final Antidumping Duty Determination of Sales at 
Less Than Fair Value and Affirmative Critical Circumstances: Certain 
Frozen Fish Fillets from the Socialist Republic of Vietnam, 68 FR 37116 
(June 23, 2003), and accompanying Issues and Decision Memorandum at 
Comment 3 (``Fish Fillets Final'').
    Also, there are circumstances in which valuing the FOPs used to 
yield an intermediate product would lead to an inaccurate result 
because the Department would not be able to account for a significant 
element of cost adequately in the overall factors buildup. In this 
situation, the Department would also value the intermediate input 
directly. See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Carbon and Certain Alloy Steel Wire Rod from Ukraine, 
67 FR 55785 (August 30, 2002), and Final Determination of Sales at Less 
Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products from the 
People's Republic of China, 66 FR 49632 (September 28, 2001). See also 
Certain Preserved Mushrooms from the People's Republic of China: Final 
Results of First New Shipper Review and First Antidumping Duty 
Administrative Review, 66 FR 31204 (June 11, 2001), and accompanying 
Issues and Decision Memorandum at Comment 2; Notice of Preliminary 
Determination of Sales at Less Than Fair Value, Affirmative Preliminary 
Determination of Critical Circumstances and Postponement of Final 
Determination: Certain Frozen Fish Fillets From the Socialist Republic 
of Vietnam, 68 FR 498, 449 (January 31, 2003); and Fish Fillets Final.
    For the final results of the most recently completed (10th) 
administrative review,\3\ the Department applied an intermediate-
product valuation methodology to all companies in order to eliminate 
the distortions in our calculation of NV. Using this methodology, we 
calculated NV by starting with a surrogate value for the garlic bulb 
(i.e., the ``intermediate product''), adjusted for yield losses during 
the processing stages, and adding the respondents' processing costs, 
which were calculated using their reported usage rates for processing 
fresh garlic.\4\
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    \3\ See Fresh Garlic from the People's Republic of China: Final 
Results and Partial Rescission of Antidumping Duty Administrative 
Review and Final Results of New Shipper Reviews, signed April 26, 
2006 (publication forthcoming) and accompanying Issues and Decisions 
Memorandum at Comment 1 (``Garlic 10th Final Results'').
    \4\ For a complete explanation of the Department's analysis, and 
for a more detailed analysis of the issues with respect to each 
respondent, see Fresh Garlic from the People's Republic of China: 
Preliminary Results and Partial Rescission of Antidumping Duty 
Administrative Review and Preliminary Results of New Shipper 
Reviews, 70 FR 69942, 69950 (November 18, 2005) (``Garlic 10\th\ 
Preliminary Results''), and accompanying Memorandum to the File 
titled, ``2003-2004 Administrative and New Shipper Reviews of the 
Antidumping Duty Order on Fresh Garlic From the People's Republic of 
China: Intermediate Input Methodology,'' dated November 10, 2005.
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    In the course of these new shipper reviews, the Department has 
requested and obtained a vast amount of detailed information from the 
respondents with respect to each company's garlic production practices. 
Based on our analysis of the information on the record and for the 
reasons outlined in the Memorandum to the File titled,``2004-2005 Semi-
Annual New Shipper Reviews of the Antidumping Duty Order on Fresh 
Garlic from the People's Republic of China: Intermediate Input 
Methodology,'' dated April 26, 2006 (``NSR Intermediate Product 
Memorandum''), we believe that the respondents are unable to accurately 
record and substantiate the complete costs of growing garlic.
    Specifically, evidence on the record indicates that the 
respondents' records

[[Page 26326]]

are deficient in recording reported labor usage. The processes required 
for growing, harvesting, and processing fresh garlic in the PRC are 
very labor-intensive. From planting, tending (e.g., taking care of 
plants), maintenance, harvesting, transporting from one area to 
another, to processing into subject merchandise, PRC garlic producers 
rely on a sizeable workforce, which incurs many man-hours to carry out 
these activities. In order to address several concerns which were 
raised during the course of previous administrative reviews with 
respect to the companies' reported growing- and harvesting-related 
labor FOPs, the Department issued supplemental questionnaires to all 
four respondents in these new shipper reviews. Also, in March 2006, the 
Department conducted verification of all four respondents.\5\ Based on 
the responses to these questionnaires, and on the information gathered 
during verification, we conclude that, in general, the respondents in 
this industry do not track actual labor hours incurred for these 
activities and, thus, do not maintain appropriate records which would 
allow them to quantify, report and substantiate this information. For 
further discussion, see NSR Intermediate Product Memorandum and 
Verification Reports.
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    \5\ See Memorandum to the File titled, ``Verification of Sales 
and Factors Response of Shandong Chengshun Farm Produce Trading 
Company, Ltd. in the Semi-Annual New Shipper Review of Fresh Garlic 
from the People's Republic of China,'' dated April 26, 2006 
(``Chengshun Verification Report''), Memorandum to the File titled, 
``Verification of Sales and Factors Response of Shenzhen Fanhui 
Import and Export Co., Ltd. in the Semi-Annual New Shipper Review of 
Fresh Garlic from the People's Republic of China,'' dated April 26, 
2006 (``Fanhui Verification Report''), Memorandum to the File 
titled, ``Verification of Sales and Factors Response of Qufu Dongbao 
Import and Export Trade Co., Ltd. in the Semi-Annual New Shipper 
Review of Fresh Garlic from the People's Republic of China,'' dated 
April 25, 2006 (``Dongbao Verification Report''), and Memorandum to 
the File titled, ``Verification of Sales and Factors Response of 
Anqiu Friend Food Co., Ltd. in the Semi-Annual New Shipper Review of 
Fresh Garlic from the People's Republic of China,'' dated April 25, 
2006 (``Anqiu Verification Report'') (collectively ``Verification 
Reports''), on file in the CRU.
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    Further, we found that the respondents also differed in the means 
and specificity with which each reported its garlic seed usage. For 
example, although all four respondents purchased all of the seed 
required for planting, it appears that one of the respondents reported 
to the Department the amount of seed actually planted (i.e., net), 
whereas the remaining three respondents used the gross weight of the 
seeds when purchased. Accordingly, consistent with our findings in the 
10th AR Final Results, we have determined that NV is understated 
because the respondent incurred a cost for the gross amount of seed 
purchased for planting that is not accounted for in the FOP reported 
for seed consumption. For further discussion, see NSR Intermediate 
Product Memorandum.
    The Department conducts verification in administrative and new 
shipper reviews to confirm the accuracy of the data reported by the 
respondents to the Department in a proceeding. As part of verification 
in cases involving NMEs, the Department must be able to reconcile the 
data submitted in the questionnaire responses to the respondent's books 
and records, and, observe on-site production activities during 
verification. When the respondent's books and records do not contain a 
level of detail sufficient to substantiate the information required to 
report accurate FOP data, there is, in essence, no document trail 
through which the Department can conduct such a verification. We find 
that the PRC garlic industry has adopted and accepted a practice of 
maintaining either very basic records of its farms' growing and 
harvesting activities or, as detailed in the NSR Intermediate Product 
Memorandum, no records at all. This record-keeping is sufficient for 
farmers in the PRC garlic industry to successfully grow and harvest 
garlic. However, the combination of lack of detailed records, unclear 
schedules, and the multi-staged production process occurring over 
several months as it relates to planting, tending, and harvesting 
activities significantly inhibits the Department's ability to conduct a 
meaningful verification of reported information.
    Finally, we also noted that there are many unknown variables that 
may affect or influence reported FOPs which are not accounted for in 
the respondents' books and records. The respondents' ability to measure 
and report accurate FOPs to the Department is greatly diminished by the 
fact that they lease the land on which the garlic is grown. Respondents 
in these reviews typically lease the land used for growing garlic for a 
period of nine months (i.e., the garlic growing season). The remaining 
three months are referred to as the ``off-season.'' None of the 
respondents have reported detailed knowledge of either the off-season 
crops produced on such leased land, crops produced on this leased land 
concurrently with the garlic, or the impact that residual inputs (e.g., 
nutrients, pesticide, herbicide, water) may have on their garlic crops. 
For further discussion, see NSR Intermediate Product Memorandum.
    Accordingly, the Department has determined that the books and 
records maintained by the respondents do not report or account for all 
of the relevant information and do not allow the respondents to 
identify all of the FOPs necessary to grow and harvest garlic. See NSR 
Intermediate Product Memorandum. Further, the respondents' books and 
records (e.g., inventory ledgers) do not allow us or the respondents 
themselves to derive accurate factor usage rates, which are necessary 
to the NME calculation methodology for NV. In addition, actual farms 
operated by each respondent are difficult to identify and locate as the 
respondents cannot provide detailed maps clearly marking the 
territories of their farms. Thus, the only way to derive complete and 
precise FOP data, without sufficiently detailed records, is for the 
Department to physically measure and observe each of these various 
production activities as they occur, as part of verification. As this 
would require the Department to be present throughout every stage of 
planting, tending, and harvesting for each respondent, the calculation 
(and verification) of accurate and complete FOPs is a virtual 
impossibility. Given that garlic is grown and harvested in one 
production cycle over a nine-month period, the Department can only 
verify the one growing/harvesting activity that is occurring at a 
particular point in the growing season.
    Thus, in these reviews, for all of the reasons identified above and 
described in the NSR Intermediate Product Memorandum, we applied an 
intermediate input methodology to all companies for these preliminary 
results of review. This is consistent with our findings in the 10th 
administrative review.\6\ For a complete explanation of the 
Department's analysis, and for a more detailed analysis of these issues 
with respect to each respondent, see NSR Intermediate Product 
Memorandum.
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    \6\ See Garlic 10th Final Results at Comment 1.
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    In future reviews, should a respondent be able to provide 
sufficient factual evidence that it maintains the necessary information 
in its internal books and records that would allow us to establish the 
completeness and accuracy of the reported FOPs, we will revisit this 
issue and consider whether to use its reported FOPs in the calculation 
of NV. For further details, see NSR Intermediate Product Memorandum.

[[Page 26327]]

2. Factor Valuations

    In accordance with section 773(c) of the Act, we calculated NV 
based on the intermediate product value and processing FOPs reported by 
the respondents for the POR. To calculate NV, we multiplied the 
reported per-unit factor quantities by publicly available surrogate 
values in India with the exception of the surrogate value for ocean 
freight, which we obtained from an international freight company. In 
selecting the surrogate values, we considered the quality, specificity, 
and contemporaneity of the data. As appropriate, we adjusted input 
prices by including freight costs to make them delivered prices. We 
calculated these freight costs based on the shorter of the reported 
distance from the domestic supplier to the factory or the distance from 
the port in accordance with the decision in Sigma Corporation v. United 
States, 117 F. 3d 1401, 1407-08 (Fed. Cir. 1997). We made currency 
conversions into U.S. dollars, in accordance with section 773A(a) of 
the Act, based on the exchange rates in effect on the dates of the U.S. 
sale(s) as certified by the U.S. Federal Reserve Bank. For a detailed 
description of all the surrogate values we used, see the Factor 
Valuation Memorandum.
    For those Indian rupee values not contemporaneous with the POR, we 
adjusted for inflation using wholesale price indices for India 
published in the International Monetary Fund's International Financial 
Statistics. Surrogate-value data or sources to obtain such data were 
obtained from the petitioners, the respondents, and the Department's 
research.
    Except as specified below, we valued the intermediate and 
processing inputs using the weighted-average unit import values derived 
from the World Trade Atlas, provided by the Global Trade Information 
Services, Inc. The source of these values, contemporaneous with the 
POR, was the Directorate General of Commercial Intelligence and 
Statistics of the Indian Ministry of Commerce and Industry.
    In accordance with 19 CFR 351.408(c)(1), the Department will 
normally use publicly available information to value FOPs, but when a 
producer sources an input from a market economy and pays for it in 
market economy currency, the Department will normally value the factor 
using the actual price paid for the input. See 19 CFR 351.408(c)(1). 
See also Lasko Metal Products v. United States, 43 F.3d 1442, 1445-46 
(Fed. Cir. 1994). However, when the Department has reason to believe or 
suspect that such prices may be distorted by subsidies, the Department 
will disregard the market economy purchase prices and use surrogate 
values to determine the NV. See Notice of Amended Final Determination 
of Sales at Less than Fair Value: Automotive Replacement Glass 
Windshields from the People's Republic of China (``PRC''), 67 FR 11670 
(March 15, 2002).
    Garlic Bulb: To value the garlic bulb we used garlic values sourced 
from the Agricultural Marketing Information Network (``Agmarknet'') 
website because we have found it is the best publicly available source 
to value the garlic bulb for the preliminary results. We obtained and 
used this information in the concurrent administrative review in order 
to value the garlic bulb.\7\ This database contains daily wholesale 
prices from markets throughout India and has information on variety, 
minimum price, maximum price, and arrivals (quantities). Specifically, 
we find that the weighted average subset of the Agmarknet data which 
reflect values for Indian domestic garlic identified as ``China'' 
variety to be the best available information to value the intermediate 
product. See Factor Valuation Memorandum for a more complete discussion 
of the Department's analysis.
---------------------------------------------------------------------------

    \7\ See Garlic 10th Final Results at Comment 2.
---------------------------------------------------------------------------

    In addition, if a respondent reported that it, or its grower, 
purchased the garlic from an unaffiliated supplier prior to processing, 
we included a freight cost from the garlic bulb supplier to the 
company's processing facility. We did not include a freight cost for 
the garlic bulb if the respondent, or its grower, grew and processed 
its own garlic. For further details, see Factor Valuation Memorandum.
    Energy and Water: To value electricity and diesel, we used values 
from the International Energy Agency to calculate a surrogate value for 
each in India for 2000, and adjusted for inflation. To value water, we 
used the rates from the website maintained by the Maharastra Industrial 
Development Corporation (http://www.midcindia.org/), which shows 
industrial water rates from various areas within the Maharastra 
Province, India (``Maharastra Data''). The Department determined in the 
2002-2003 administrative review that agrarian water rates for 
irrigation are highly subsidized by the Indian government and, 
therefore, it is appropriate to use Indian industrial rates as a 
surrogate value for water in the PRC.\8\ Furthermore, the Maharastra 
data is publicly available.
---------------------------------------------------------------------------

    \8\ See Fresh Garlic from the People's Republic of China: Final 
Results of Antidumping Duty Administrative Review, 70 FR 34082 (June 
13, 2005), and accompanying Issues and Decision Memorandum at 
Comment 3.
---------------------------------------------------------------------------

    Packing: The respondents reported packing inputs consisting of 
plastic nets/mesh bags, paper cartons, plastic packing bands. All of 
these inputs were valued using import data from the World Trade Atlas 
that covered the POR, with the exception of paper cartons purchased by 
Fanhui, which sourced this input from market economies and paid for it 
in a market-economy currency. Therefore, for Fanhui, we have used its 
market-economy purchase price in our calculations.
    Labor: We valued labor, consistent with 19 CFR 351.408(c)(3), using 
the PRC regression-based wage rate as reported on Import 
Administration's home page, Import Library, Expected Wages of Selected 
NME Countries, revised in November 2005, and posted to Import 
Administration's website at http://www.ia.ita.doc.gov. The source of 
this wage rate data on Import Administration's web site is the Yearbook 
of Labour Statistics 2003, International Labor Office, (Geneva: 2003), 
Chapter 5B: Wages in Manufacturing (http://laborsta.ilo.org). The years 
of the reported wage rates range from 1998 to 2003. Because this 
regression-based wage rate does not separate the labor rates into 
different skill levels or types of labor, we have applied the same wage 
rate to all skill levels and types of labor reported by the respondent. 
See id.
    Land Value and Cold Storage: We find that, based on the use of 
intermediate product, the market value of the intermediate product 
(i.e., the garlic bulb) already accounts for the cost of leasing the 
land used to grow garlic as well as any cold storage costs incurred 
prior to processing. Therefore, we did not value land or cold storage 
for these preliminary results of review because doing so might result 
in double counting of these costs.\9\
---------------------------------------------------------------------------

    \9\ See Garlic 10th Preliminary Results, 70 FR at 69950 
(unchanged in the Garlic 10\th\ Final Results).
---------------------------------------------------------------------------

    By-product: The respondents claimed an adjustment for revenue 
earned on the sale of garlic sprouts. We find that because the market 
value of the intermediate product (i.e., the garlic bulb) already 
accounts for the experience of the grower's sale of any by-product 
produced while growing garlic, we have not made a by-product offset 
amount from NV. See Garlic 10th Preliminary Results, 70 FR at 69950 
(unchanged in the final results; see Garlic 10\th\ Final Results at 
Comment 5).
    Movement Expenses: We valued the truck rate based on an average of 
truck

[[Page 26328]]

rates that were published in the Indian publication Chemical Weekly 
during the POR. We valued foreign brokerage and handling charges based 
on an average value calculated in Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat 
Products From India, 66 FR 50406 (October 3, 2001), and Certain 
Preserved Mushrooms From India: Final Results of Antidumping Duty 
Administrative Review, 71 FR 10646 (March 2, 2006). We adjusted data 
not contemporaneous with the POR when appropriate.
    Financial Expenses: As discussed in the Factor Valuation 
Memorandum, Dongbao submitted the publicly available financial 
information of one company. The petitioners did not submit any 
financial statements for these preliminary results. Because we are 
using an intermediate methodology for all respondents in these reviews, 
it is important to use financial ratios derived from a surrogate 
company whose financial expenses do not include upstream costs (i.e., 
growing costs) to avoid double-counting factory overhead, selling, 
general and administrative expenses, and profit. We preliminarily 
conclude that the financial information of Preethi Tea Industry Private 
Limited (``Preethi'') and Limtex India Limited (``Limtex''), tea 
producers in India, are most representative of the financial 
experiences of the respondent companies because they process an 
intermediate product prior to its sale.
    Thus, to value factory overhead, and selling, general and 
administrative expenses, we used rates based on data taken from the 
2003/2004 financial statements of Preethi and the 2003/2004 and 2004/
2005 financial statements of Limtex for these preliminary results. 
Preethi's 2003/2004 financial statement did not report a profit. 
Therefore, for purposes of these preliminary results we excluded the 
profit ratio that was reported on its 2003/2004 financial statement. 
See Factor Valuation Memorandum for a more complete discussion of the 
Department's analysis.

Preliminary Results of Review

    We preliminarily determine that the following dumping margins exist 
for the period November 1, 2004, through April 30, 2005:

----------------------------------------------------------------------------------------------------------------
                Exporter                                        Grower                         Margin (percent)
----------------------------------------------------------------------------------------------------------------
Shandong Chengshun Farm Produce Trading   Jinxiang Chengsen Agricultural Trade Company, Ltd.                0.00
 Company, Ltd..........................
Shenzhen Fanhui Import and Export Co.,           Shenzhen Fanhui Import and Export Co., Ltd.                0.00
 Ltd...................................
Qufu Dongbao Import and Export Trade          Qufu Dongbao Import and Export Trade Co., Ltd.                0.00
 Co., Ltd..............................
Anqiu Friend Food Co., Ltd.............                          Anqiu Friend Food Co., Ltd.                0.00
----------------------------------------------------------------------------------------------------------------

    The Department will disclose calculations performed for these 
preliminary results to the parties within five days of the date of 
publication of this notice in accordance with 19 CFR 351.224(b).
    Interested parties may submit case briefs and/or written comments 
no later than 30 days after the date of publication of these 
preliminary results of review. See 19 CFR 351.309(c)(ii). Rebuttal 
briefs and rebuttals to written comments, limited to issues raised in 
such briefs or comments, may be filed no later than 37 days after the 
date of publication of these preliminary results of review. See 19 CFR 
351.309(d).
    Any interested party may request a hearing within 30 days of 
publication of these preliminary results. See 19 CFR 351.310(c). 
Requests should contain the following information: (1) The party's 
name, address, and telephone number; (2) the number of participants; 
and (3) a list of the issues to be discussed. Oral presentations will 
be limited to issues raised in the briefs. If we receive a request for 
a hearing, we plan to hold the hearing seven days after the deadline 
for submission of the rebuttal briefs at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230.
    The Department will issue the final results of these new shipper 
reviews, which will include the results of its analysis of issues 
raised in the briefs, within 90 days of publication of these 
preliminary results, in accordance with 19 CFR 351.224(i)(1), unless 
the time limit is extended.

Assessment Rates

    Upon issuance of the final results, the Department will determine, 
and CBP shall assess, antidumping duties on all appropriate entries. 
The Department will issue appropriate assessment instructions directly 
to CBP within 15 days of publication of the final results of these new 
shipper reviews. In accordance with 19 CFR 351.212(b)(1), we have 
calculated an exporter/importer (or customer), specific assessment rate 
or value for merchandise subject to these reviews. For these 
preliminary results we divided the total dumping margins for the 
reviewed sales by the total entered quantity of those reviewed sales 
for each applicable importer. In these reviews, we will direct CBP to 
assess importer (or customer) specific assessment rates based on the 
resulting per-unit (i.e., per kilogram) amount on each entry of the 
subject merchandise during the POR.

Cash Deposit Requirements

    Bonding will no longer be permitted to fulfill security 
requirements for shipments of fresh garlic from the PRC grown by CATC 
and exported by Chengshun, grown and exported by Fanhui, grown and 
exported by Dongbao, and grown and exported by Anqiu Friend that are 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date of the final results of these new shipper reviews. The 
following cash deposit requirements will be effective upon publication 
of the final results of these new shipper reviews for all shipments of 
subject merchandise from Chengshun, Fanhui, Dongbao, and Anqiu Friend 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date, as provided by section 751(a)(2)(C) of the Act: (1) 
For subject merchandise grown by CATC and exported by Chengshun, grown 
and exported by Fanhui, grown and exported by Dongbao, or grown and 
exported by Anqiu Friend, the cash deposit rate will be that stipulated 
in the final results of review, except, no cash deposit will be 
required if the cash deposit rate calculated in the final results is 
zero or de minimis, i.e., less than 0.5 percent; (2) for subject 
merchandise exported by Chengshun but not grown by CATC, the cash 
deposit rate will continue to be the PRC-wide rate (i.e., 376.67 
percent); and (3) for subject merchandise exported by Fanhui, Dongbao, 
or Anqiu Friend, but grown by any other party, the cash deposit rate 
will be the PRC-wide rate. These deposit requirements shall remain in 
effect until publication of the final results of the next 
administrative review.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR

[[Page 26329]]

351.402(f) to file a certificate regarding the reimbursement of 
antidumping duties prior to liquidation of the relevant entries during 
this review period. Failure to comply with this requirement could 
result in the Secretary's presumption that reimbursement of antidumping 
duties occurred and the subsequent assessment of double antidumping 
duties.
    These new shipper reviews and this notice are published in 
accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act and 19 
CFR 351.214(h).

    Dated: April 26, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-6757 Filed 5-3-06; 8:45 am]
BILLING CODE 3510-DS-S